Whether it is a game of badminton or cricket – you need to attack to win. So forget what the stats tell you – we were winning (even in tests) because we had Sehwag at the top thrashing the hell out of the bowlers. Yes you need to be defensive too, but it is attacking that wins you points – or matches.

Wealth creation has 3 legs –

you need to earn well

you need to save aggressively

you need to convert that saved amount into investments wisely.

How people deal with their money depends on what money impressions their parents have left on them. So people who come from not very well off backgrounds save well, but are afraid to invest. They try getting rich but are unable to do so, because of their attitude. Many of them have got rich because some ‘esop’ was thrust upon them, and some of them were too lazy to sell it off. So they got rich.

Earning well is a good requisite, but saving and investing are not so intuitive, but not easy to start off. Deepika Padukon earned Rs. 112 crores last year. Is she done and dusted for her life? Does she need to earn more?

Well by most common man standards Deepika has earned a huge amount AND IT SHOULD BE ENOUGH for her retirement. However a film actor has a lot of expenses – which may not happen to a retired school teacher! So she has to spend on all of that – let her say her personal expenses are Rs. 2 crores a year. She will have to spend on car, driver, secretary, agent, pr, dietecian, massage, fitness trainer…etc. I am calling all that as business expenditure.

Assuming at the age of 44 she retires and has no income. Assuming that her income at that stage is zero. How much will she need for her retirement?

Well at Rs. 5 crores a year..she will need about 250 crores for the next 50 years…..invested in good assets. THAT CALLS FOR SENSIBLE INVESTING NOW.

Earning alone is not enough. That has to be saved, and then invested.

Saving is not so difficult, but it is a good habit to form at a young age. Assuming DK has middle class values and is saving enough, she has to invest that amount. That is tricky. Makes a lot of sense to get a good Investment Adviser. Till she gets a good adviser she can afford to be in an Index fund, and a low duration bond fund. Just 2 funds. No sweat, no asset allocation, no nothing. No. No term insurance, but a reasonably big medical insurance – just in case.

For the common man who is not into that kind of money the need to get a good investment adviser is even more urgent. You will need to do a sip in a couple of good funds – including a good ELSS fund, a short duration bond fund, and an index fund. Once you start learning (with the help of your adviser) you can experiment with large cap, small cap, midcap etc. You could even start by investing (not trading) in one or two good companies EVERY YEAR…but the time you are 45 you would have enough experience and knowledge…to invest in MF of your choice…..

So if you know how to earn well, save well, invest wisely,,,,,you will reach the end of your wealth journey in good shape…